Bio-Fuel Demand has grown rapidly up 30% in the US over the past year as Consumers demand cleaner fuels and independence from Middle East oil. Thanks to this booming demand for Ethanol, which can be produced from sugar, Peru is seeing large energy firms buying up unwanted land in the Peruvian Desert to farm, process, and export the finished Ethanol. In fact Peru seeks to be an Ethanol Hub for the US supplying 7% of current US Ethanol demand. Peru also has excellent trade terms with the US and is currently in the process of implementing a Free trade agreement.
A number of factors are pushing up demand for Ethanol. With crude oil reaching $100 a barrel it is becoming cost efficient for consumers to seek alternative fuel sources. Gasoline is harmful to the environment and is seen as one of the leading causes of global warming. Because of this, green movements have pushed for cleaner burning fuels. Demand has also come from changing laws in the US as it begins to require refineries to substitute Ethanol in gasoline in place of harmful substitutes currently used.
Peru is seen as one of the best places to grow sugarcane in terms of tons produced per acre. This larger production possibility gives Peruvian sugarcane farms large cost advantages because of economies of scale. Because of these reasons, High Yields firms like Stratos Renewable Energy say they will be able to produce Ethanol at the lowest global prices. They are beginning to implement a multi-phase growth strategy to be Peru’s leading Ethanol producer producing 154 million gallons of Ethanol a year.
The Free Trade agreement signed by the U.S. and Peru in 2005, eliminating tariffs and trade barriers to goods and services traded between the two nations, is expected to expand trade between the two countries and allow Peru’s economy to grow creating more jobs through trade. This agreement has also made US investment within Peru easier and safer due to implementation of a predictable legal framework.
Stratos Renewable Energy is taking advantage of these favorable conditions within Peru to become Latin America’s leader in sugarcane ethanol production. Peru’s economic growth and favorable trade conditions with the US make this a very attractive place to grow, process, and distribute Sugarcane Ethanol. Gov. Cesar Trelles of Northwestern Peru has predicted that Northwestern Peru will become an ethanol hub producing 400 million gallons of sugarcane Ethanol a year.
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